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Sunday, September 27, 2009

Market Thought... contradictions

The Fed issued their statement to keep their policies in place, and then one of their Governors produced an op-ed WSJ suggesting a very fast pace of rate increases which was contradicting his vote to keep policies as they were.

My personal opinion is to strengthen the dollar that could cause a major market correction. But my opinion means jack-shit, and I rely on what the indicators are telling me, so I am not convinced we will see a major correct just yet.

The 10yr note yield appears to have entered an interesting position. On one hand it is on support. On the other hand it is being capped by the golden ratio SMAs (38 and 62 SMAs).

The money question is whether or not support holds or it enters another down trend. If it enters a down trend, this would suggest the economy will have a 'double dip'. It will signify a deflation and a weaker economy that does not merit higher interest rates.

If it bounces, and the breaks from the golden ratio capping, then it would indicate the economy is moving, meriting higher interest rates.

Is the economy in a position to see reduced 10yr rates? The decline in the Baltic Dry Index may suggest yes, but the indications of the BDI were not translated to commodity prices.

As of now, all the indicators (that I can see and follow) are moving lock step w/the market. Basically they are not telling me more then what the market itself is saying.